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A Framework for Comparing Six-Sigma, Lean Thinking and Theory of Constraints by Dave Nave

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A Framework for Comparing Six-Sigma, Lean Thinking and Theory of Constraints by Dave Nave Improvement Methodology Integration: A framework For Comparing Six-Sigma, Lean Thinking and Theory of Constraints By Dave Nave Within the American business community a proliferation of process improvement champions are vying for the attention of leaders. Each champion advocating the adoption of their improvement methodology in your organization. Almost all champions claim that if you adopt their specific tools or follow a specific way of thinking all your business problems will be solved. After listening to multiple champions advocate their special methodology, how do you choose what will fit into your situation? What methodology fits the culture of your organization? Many process improvement methodologies appear to conflict with each other, or at least down play the contribution of other methodologies. This confusing montage of tools and philosophies creates the illusion of conflicting strategies. This article will help you understand some similarities and differences among Six Sigma, Lean Thinking and Theory Of Constraints, and will offer you a guide for deciding which to use. We will identify some commonalties, primary and secondary effects of each methodology, unique and common assumptions, and create a model to help you understand these relationships. Since we are comparing the nuances and implications of multiple programs, we will drive towards the fundamentals. As with most comparisons and contrasts, oversimplification is a reality we have to accept. Many improvement programs promote themselves by having a primary theory, with a series of application guidelines, and finally a host of antidotal stories about the implications. The following chart describes the essence of each program. We will discuss each in slightly more detail, identify a few underlying assumptions and explore some effects of using each methodology. Improvement Programs Program Six Sigma Lean Thinking Theory of Constraints Theory Reduce Variation Remove Waste Manage Constraints Application 1. Define 1. Identify Value 1. Identify Constraint 2. Measure 2. Identify Value Stream 2. Exploit Constraint Guidelines 3. Analyze 3. Flow 3. Subordinate Processes 4. Improve 4. Pull 4. Elevate Constraint 5. Control 5. Perfection 5. Repeat cycle Focus Problem Focused More with Less System Flow Six Sigma Six Sigma touts that focusing on the reduction of variation will solve process and business problems. By using a set of statistical tools to understand the fluctuation of a process, management can begin to predict the expected outcome of that process. If the outcome is not satisfactory, then associated tools are used for further understanding of the elements influencing that specific process. Through a rigid and structured investigation methodology the process elements are more completely understood. Through reducing the variation of multiple elements, the assumption is that the outcome of the original process will be improved. Six Sigma experts use five steps: define, measure, analyze, improve, and control (commonly known as DMAIC). • Practitioners begin by Defining the process. Who are the customers and what are their problems? Identify the key characteristics of the process that is important to the customer, be it the subsequent processes or the ultimate user. They identity existing output conditions along with process elements that support those key characteristics. • Next is the focus on Measuring of the process. Key feature characteristics are categorized, measurement systems are verified, and data are collected. • Once data are collected an Analysis is performed. The intent is to convert raw data into information that provides insights into the process. What are the most important causes of the defects? Fundamental causes of defects or problems are identified. • The fourth step is to Improve the process. Solutions to problems are chosen. Changes are made to the process. Results of process changes are seen in the measurements. At this step changes can be judged whether they are beneficial, or if another set of changes are necessary. • If the process is performing at a desired level then the process is put under Control. This last step is the sustaining portion of the Six Sigma methodology. The process is monitored to assure no unexpected changes occur. When focusing on the primary area of variation reduction, other secondary effects are produced. Quality is improved, productivity is increased, and the process becomes predictable. Process investigation produces a re- evaluation of the value added status of many elements. Some elements are modified, while others are discontinued. Elements are refined and improved. Mistakes and opportunities for mistakes are reduced. Some elements discovered during the Six Sigma investigation constrain the flow of product or services through the system. Flow is defined as the time from input of raw material to the output of a saleable item. Improvement of the process that restricts flow, results in reduced variation and improved quality, as well as improvement the volume of the process output. Thus the organization has less money tied up in in-process inventory. The time from when money for input material, to the time when the company sees a profit is reduced. The company can respond to customer needs more quickly. Six Sigma process is founded on two major assumptions. First, people in the organization must understand and appreciate that numbers can represent features and characteristics of a process. They appreciate that a deeper understanding of data and data analysis can be used to produce improvements; that graphical representation of data provides new and different perspective of the process. Analytical types, such as Engineers and Scientists, generally respect this approach. Another assumption is that through the reduction of variation of all the processes, overall performance of the organization will be improved. While it is hard to argue that improvement may not be appropriate, the economic reality of business says we want the most improvement for the least investment. An entire organization improving their individual processes may actually have a detrimental effect on the company’s ability to satisfy the customer’s needs, and provide product and services at the right time at the lowest cost. The realized savings to the system will be less than the sum of all the improved components. So, everyone in the organization improving things just because they can, may be improving the wrong things for the business. Lean Thinking Lean Thinking is sometimes called Lean Manufacturing, the Toyota Production System, or other Lean acronyms. Lean focuses on the removal of waste. Waste is defined as anything not necessary to produce the product or service. One common measure is ‘touch-time’. The time the product is actually being worked on, or touched by the worker. Frequently, Lean Thinking’s focus is manifested into an emphasis on flow. There five essential steps in Lean: • First is determining what features add value in the product. Determination is made from the internal and external customer standpoint. Value is expressed in terms of how a product meets the customer’s needs, at a specific price, at a specific time. Specific products or services are evaluated on what features add value. The value determination can be from the perspective of the ultimate customer or a subsequent process. • Once value is identified, activities that contribute value are identified. The entire sequence of activities is called the Value Stream. Activities that do not contribute value to the product or service are assessed as to whether or not the activity is necessary. Necessary operations are defined as being a Improvement Methodology Integration Page 2 of 7 Dave Nave prerequisite to other value-added activities, or being an essential part of the business. An extreme example of a non-value added but necessary process is payroll. After all, people need to be paid. Necessary, non-value added activities are reduced to a minimum impact on the process. All other non-value added activities are transitioned out of the process. • Once value added activities and necessary non-value activities are identified, improvement efforts are directed towards making the activities Flow. Flow is the uninterrupted movement of product or service through the system, to the customer. Major inhibitors of flow are work-in-queue, batch processing, and transportation. These buffers slow the time from when the product or service is initiated to when it is delivered to the customer, and tie up money that can be used elsewhere in the organization. Buffers also cover up the affects of system restraints and other waste activities. • After waste is removed, and flow established, efforts turn to letting the customer Pull product or service through the process. Making the process responsive to providing the product or service only when the customer needs that specific product or service. Not before, not after. • The last step is called Perfection. This effort is the repeated and constant attempt to remove non-value activity, improve flow, and satisfy the customer delivery needs. While Lean focuses on removing un-necessary costs and improving flow, some secondary effects become apparent. Quality is improved. The product spends less time in-process and reduces the chances of damage or becoming obsolete. Simplification of processes results in reduction of variation. By looking at all the activities in the value stream the system constraint is removed and performance is improved. This methodology
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